Question 1

What is Business Contract Hire and is it different to Business Car Leasing?

Accepted Answer

Both Business Contract Hire and Business Car Leasing are the same thing and instead of buying a car you simply rent it from a finance company for an agreed period of time. At Dick Lovett we have a team of business leasing and contract hire specialists who can help you choose how long you want the contract for and decide your annual mileage allowance. These criteria then help to determine the amount you will pay each month.

The most obvious difference between buying and leasing is that when you buy a car you own it and when you lease a car, you don’t. You are renting the car from the finance company, so at the end of the contract all you have to do is hand the car back in good condition – just like you would a hire car.

As with any contractual arrangement, you must fulfil your obligations under the lease agreement. If you don’t there’s likely to be more to pay so you should be mindful of what you have committed to and how the car is used. Exceeding the agreed mileage, returning the car early or in poor condition could incur extra charges.

Question 2

What are the pros and cons of Business Car Leasing and Personal Contract Hire?

Accepted Answer

There are lots of reasons why leasing or hiring a car through Dick Lovett is a great idea but, of course, you still have responsibilities and you won’t own the vehicle at the end of the contract hire period. Here we’ve set out the key points of the leasing deals:

Pros

Drive a brand new car every few years
Low initial outlay - typically equivalent to 3 months rental payment
Fixed, manageable monthly payments – helps with manage cash flow and enables you to drive a better car for your budget
Choice of contract term - from 24 to 48 months
Option to include servicing and maintenance
If you run a business, there are tax benefits – car lease costs can be up to 100% allowable against corporation tax depending on its Co2 emissions, and you can reclaim 50% of the VAT on the monthly rental cost
No depreciation to worry about - at the end of the contract, the vehicle is simply handed back so no worries about resale value or having to dispose of it
Hassle free – everything is taken care of by the dealer and finance company
Road tax, manufacturer’s warranty and breakdown cover is included
Only have to pay for fuel and insurance

Cons

You don’t own the car and there is no option to buy it at the end of the contract
You will need the amount of mileage you need and if you go over this, you will have to pay an excess mileage charge
If you decide to end the contract early, you may incur charges
You must return in a well-maintained condition. If not, there will be extra charges to pay
You must pay for fully comprehensive insurance cover

Question 3

Surely, I&rsquo;ll get a better personal or business car leasing finance deal if I go through a broker?

Accepted Answer

Dealerships like Dick Lovett can often offer leasing and car hire deals that brokers can’t access, such as retail discounts, and sometimes reduce prices on older stock when newer models launch. With Dick Lovett you also have the option of part-exchanging your old car to cover some of the initial cost of a contract hire agreement. Most brokers don't offer part exchange, so you'll need to find the money from elsewhere – and arrange to sell or dispose of your old car.

Going direct to a dealer cuts out any extra and potentially unnecessary expense. The broker is simply a middleman between you or or business, a dealership and a lender. By going directly to Dick Lovett you only deal with us and a finance company. This means you won’t have to pay admin fees and other charges for the broker’s services, which can be upwards of £300.

Plus at Dick Lovett you know you’re dealing with a long-standing family business which is trusted by other local businesses and the community. You can be assured our team will always go the extra mile if you choose a Personal Contract Hire or Business Car Leasing deal with us.

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